Merrill Trims Executive Bonuses

Published: February 28, 2002

Merrill Lynch limited cash bonuses for top executives to $1 million last year and made up the difference with more stock, according to an internal memorandum.

Earnings -- excluding the costs related to Sept. 11 and a revamping -- fell 37 percent last year. To cope with the decline, which was brought on by declining trading and investment banking revenue, Merrill cut 15,000 jobs, or 21 percent, of its staff.

David H. Komansky, its chief executive; E. Stanley O'Neal, its president; and Merrill's executive and senior vice presidents received cash bonuses of $1 million, according to the memorandum sent from Mr. Komansky and Mr. O'Neal yesterday.

Mr. Komansky's bonus in 2000 was $15.6 million.

''Executive compensation for 2001 decreased in line with the company's financial results,'' the memo said.

Merrill replaced the lower cash payouts with restricted stock that vests in three years, the memo said.

''Replacing cash compensation with 'at risk' restricted units tied directly to the price of our stock further aligns executive and stockholder interests, and balances performance for the near-term and longer-term strategic objectives,'' the memo said.

Merrill's bonus cuts have been the most severe so far on Wall Street, where several chief executives have received lighter paychecks.

Last year, the Goldman Sachs Group paid Henry Paulson, its chief, a bonus of $11.6 million, compared with $14.1 million in 2000. Net income fell 29 percent in 2001.

In October, the chief executive of the Bear, Stearns Companies, James E. Cayne, agreed to take a 50 percent bonus cut, along with the rest of his firm's executive committee. Bear, Stearns profit dropped 20 percent last year.